The World Economic Forum has released its 2007-2008 Global Competitiveness Report. Not surprisingly, the US come out on top, with Switzerland, Denmark, Sweden, Germany, Finland, Singapore, Japan, the UK and the Netherlands close behind. What I find interesting, however, is how closely these countries are usually ranked. There is not a huge difference – which is surprising when one considered the difference in public policies in the various countries. The top ten has a mix of more economic laissez faire, interventionist, “old Europe” and the Nordic model.
New this year is a survey of corporate leaders regarding each country’s business climate. According to the Financial Times, this “impressionistic” may cause problems:
This year’s annual ranking exercise will confuse avid WEF watchers as a change in the methodology has promoted some countries such as the US and Germany far above last year’s published league table positions, while demoting Finland, once almost always top of the tree to sixth place.
I’ve always found the Global Competitiveness Report to be a useful study. But, like any other analysis and ranking, it needs to be taken with a grain of salt. These surveys of business climate have always struck me as one of those things that need to be taken carefully. Worthwhile, but certainly not the definitive answer on how well we are doing.
UPDATE: Here is the Wall Street Journal’s take on the other changes in the methodology:
The U.S. jumped to first from sixth place last year, according to the ranking by the World Economic Forum, a Swiss institute best known for hosting a big annual meeting of business and political leaders in Davos, a ski resort, each January.
However, that sharp climb was due to a change in methodology that gives more weight to market-related factors in the survey, relative to the fiscal and public-policy criteria on which the U.S. is weak. Under the new methodology, the U.S. would have topped the rankings last year too.
“The U.S. does amazingly well on innovation and markets, but on the macroeconomic stability pillar it ranks 75th,” out of 131 countries included in the survey, said Jennifer Blanke, the Forum’s chief economist and a co-author of the report. “This still reflects a very serious problem that could hurt the U.S. in the future.” Fallout from the recent credit crisis is an example of that risk, according to the survey’s authors.